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Test your basic knowledge |
AP Microeconomics
Start Test
Study First
Subjects
:
economics
,
ap
Instructions:
Answer 50 questions in 15 minutes.
If you are not ready to take this test, you can
study here
.
Match each statement with the correct term.
Don't refresh. All questions and answers are randomly picked and ordered every time you load a test.
This is a study tool. The 3 wrong answers for each question are randomly chosen from answers to other questions. So, you might find at times the answers obvious, but you will see it re-enforces your understanding as you take the test each time.
1. Ei = (%dQd good X)/(%d Income)
Producer surplus
Free-Rider Problem
Subsidy
Income Elasticity
2. The difference between total revenue and total explicit and implicit costs
Economies of Scale
Economic Profit
Inferior Goods
Short run
3. The sum of consumer surplus and producer surplus
Determinants of Supply
Total Welfare
Law of Demand
Market Equilibrium
4. The philosophy that a citizen should receive a share of economic resources proportional to the marginal revenue product of his or her productivity
Marginal Productivity Theory
Excess Capacity
Market power
Variable inputs
5. Exists if a producer can produce a good at lower opportunity cost than all other producers
Average Total Cost (ATC)
Comparative Advantage
Free-Rider Problem
Market Equilibrium
6. The firm hires the profit maximizing amount of a resource at the point where MRP = MRC
Cartel
Marginal Cost (MC)
Marginal tax rate
Profit Maximizing Resource Employment
7. Ed = (%dQd)/(%dP). Ignore negative sign
Shortage
Price elasticity
Monopoly long-run equilibrium
Determinants of Labor Demand
8. Two goods are consumer substitutes if they provide essentially the same utility to consumers
Law of Supply
Oligopoly
Substitute Goods
Normal Profit
9. Direct - purchased - out-of-pocket costs paid to resource suppliers provided by the entrepreneur
Economies of Scale
Relative Prices
Explicit costs
Income Effect
10. Consumer income - prices of substitute and complementary goods - consumer tastes and preferences - consumer speculation - and number of buyers in the market all influence demand
Determinants of Demand
Explicit costs
Free-Rider Problem
Opportunity Cost
11. The additional cost incurred from the consumption of the next unit of a good or a service
Marginal Cost (MC)
Average Fixed Cost (AFC)
Natural Monopoly
Private goods
12. Ex -y = (%dQd good X) / (%d Price Y). If Ex -y > 0 - goods X and Y are substitutes. If Ex -y < 0 - goods X and Y are complementary
Monopoly long-run equilibrium
Non-collusive oligopoly
Cross-Price Elasticity of Demand
Total Product of Labor (TPL)
13. The ability to set the price above the perfectly competitive level
Perfectly competitive long-run equilibrium
Marginal Product of Labor (MPL)
Free-Rider Problem
Market power
14. A measure of industry market power. Sum the market share of the four largest firms and a ratio above 40% is a good indicator of oligopoly
Substitute Goods
Four-firm concentration ratio
Shutdown Point
Perfectly inelastic
15. The difference between the price received and the marginal cost of producing the good. It is the area above the supply curve and under the price
Producer surplus
Comparative Advantage
Perfectly elastic
Monopoly
16. For one good - constrained by prices and income - a consumer stops consuming a good when the price paid for the next unit is equal to the marginal benefit received
Explicit costs
Private goods
Constrained Utility Maximization
Decreasing Cost industry
17. Total revenue rises with a price increase if demand is price inelastic and falls with a price increase if demand is price elastic
Marginal Cost (MC)
Producer surplus
Total Revenue Test
Incidence of Tax
18. Substitutes - cost as percentage of income - and time to adjust to price changes all influence price elasticity
Determinants of elasticity
Normal Profit
Price elastic demand
Perfectly competitive long-run equilibrium
19. The practice of selling essentially the same good to different groups of consumers at different prices
Market power
Perfectly competitive long-run equilibrium
Collusive oligopoly
Price discrimination
20. Es = (%dQs) / (%dPrice)
Economic Profit
Normal Goods
Price Elasticity of Supply
Fixed inputs
21. Entry of new firms shifts the cost curves for all firms downward
Price discrimination
Decreasing Cost industry
Collusive oligopoly
Marginal Benefit (MB)
22. A legal maximum price above which the product cannot be sold. If a floor is installed at some level above the equilibrium price - it creates a permanent shortage
Price Ceiling
Short run
Substitute Goods
Marginal Cost (MC)
23. Pm > MR = MC - which is not allocatively efficient and dead weight loss exists. Pm > ATC - which is not productively efficient. Profit > 0 so consumer surplus is transferred to the monopolist as profit
Luxury
Dead Weight Loss
Monopoly long-run equilibrium
Price elasticity
24. All firms maximize profit by producing where MR = MC
Profit Maximizing Rule
Derived Demand
Market Economy (Capitalism)
Market Equilibrium
25. Measures the cost the firm incurs from using an additional unit of input. In a perfectly competitive labor market - MRC = Wage. In a monopsony labor market - the MRC > Wage
Income Effect
Marginal Resource Cost (MRC)
Unit elastic demand
Specialization
26. A market structure characterized by a few small firms producing a differentiated product with easy entry into the market
Incidence of Tax
Monopolistic competition
Spillover costs
Determinants of Supply
27. Excess demand; a shortage exists at a market price when the quantity demanded exceeds the quantity supplied
Demand for Labor
Shortage
Total Product of Labor (TPL)
Substitute Goods
28. Factors of production - 4 categories: labor - physical capital - land/natural resources - and entrepreneurial ability
Price floor
Long Run
Constant Returns to Scale
Resources
29. The lost net benefit to society caused by a movement away from the competitive market equilibrium
Producer surplus
Dead Weight Loss
Non-collusive oligopoly
Absolute Advantage
30. The case where economies of scale are so extensive that it is less costly for one firm to supply the entire range of demand
Natural Monopoly
Luxury
Perfectly elastic
Consumer surplus
31. The total quantity - or total output of a good produced at each quantity of labor employed
Positive externality
Price elastic demand
Total Product of Labor (TPL)
Total variable costs (TVC)
32. The price of a good measured in units of currency
Determinants of Supply
Dead Weight Loss
Long Run
Absolute prices
33. ATC = TC/Q = AFC + AVC
Average Total Cost (ATC)
Total Fixed Costs (TFC)
Determinants of elasticity
Marginal Resource Cost (MRC)
34. The difference between total revenue and total explicit costs
Accounting Profit
Oligopoly
Decreasing Cost industry
Diseconomies of Scale
35. When firms focus their resources on production of goods for which they have comparative advantage
Income Effect
Law of Increasing Costs
Specialization
Profit Maximizing Resource Employment
36. Costs of inputs - technology and productivity - taxes/subsidies - producer speculation - price of other goods that could be produced - and number of sellers all influence supply
Marginal Resource Cost (MRC)
Determinants of Supply
Marginal Analysis
Economics
37. The combination of labor and capital that minimizes total costs for a given production rate. Hire L and K so that MPL / PL = MPK / PK or MPL/MPK = PL/PK
Least-Cost Rule
Absolute Advantage
Constant Returns to Scale
Monopoly long-run equilibrium
38. In the case of a public good - some members of the community know that they can consume the public good while others provide for it. This results in a lack of private funding and forces the government to provide it
Price inelastic demand
Luxury
Variable inputs
Free-Rider Problem
39. A firm that has market power in the factor market (a wage-setter)
Perfectly elastic
Accounting Profit
Average Fixed Cost (AFC)
Monopsonist
40. Production inputs that cannot be changed in the short run. Usually this is the plant size or capital
Income Elasticity
Shutdown Point
Determinants of elasticity
Fixed inputs
41. The marginal utility from consumption of more and more of that item falls over time
Average Fixed Cost (AFC)
Public goods
Substitute Goods
Law of Diminishing Marginal Utility
42. Occurs when there is no more incentive for firms to enter or exit. P=MR=MC=ATC and profit = 0
Perfectly competitive long-run equilibrium
Oligopoly
Law of Increasing Costs
Monopoly long-run equilibrium
43. The mechanism for combining production resources - with existing technology - into finished goods and services
Four-firm concentration ratio
Explicit costs
Total Revenue
Production function
44. Indirect - non-purchased - or opportunity costs of resources provided by the entrepreneur
Producer surplus
Implicit costs
Complementary Goods
Price elastic demand
45. The imbalance between limited productive resources and unlimited human wants
Scarcity
Negative externality
Excess Capacity
Surplus
46. The number of units of any other good Y that must be sacrificed to acquire good X. Only relative prices matter
Profit Maximizing Resource Employment
Relative Prices
Unit elastic demand
Shutdown Point
47. Measures the value of what the next unit of a resource (e.g. - labor) brings to the firm. MRPL = MR x MPL. In a perfectly competitive product market - MRPL = P x MPL. In a monopoly product market - MR < P so MRPm < MRPc.
Normal Goods
Marginal Revenue Product (MRP)
Economies of Scale
Accounting Profit
48. Holding all else equal - when the price of a good rises - consumers decrease their quantity demanded for that good
Law of Demand
Excess Capacity
Market power
Total Revenue Test
49. Entry of new firms shifts the cost curves for all firms upward
Increasing Cost Industry
Determinants of elasticity
Absolute Advantage
Scarcity
50. Product demand - productivity - prices of other resources - and complementary resources
Explicit costs
Total variable costs (TVC)
Determinants of Labor Demand
Profit Maximizing Resource Employment